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Mad Money

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Europe 15, Avis 15, Cramer 11, U.s. 10, Cyprus 8, California 7, Greece 4, Us 4, United States 4, Citibank 4, America 3, S&p 3, Finland 3, Garner 3, Jim Cramer 2, Dr. Nader 2, Mr. Cramer 2, Jim 2, Hertz 2, Peggy 2,
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  CNBC    Mad Money    News/Business.  (2013) New.  

    March 19, 2013
    6:00 - 7:00pm EDT  

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...amelia... neil and buzz: for teaching us that you can't create the future... by clinging to the past. and with that: you're history. instead of looking behind... delta is looking beyond. 80 thousand of us investing billions... in everything from the best experiences below... to the finest comforts above. we're not simply saluting history... we're making it.
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mike? >> mike? >> great run, but i think the run's coming to an end. ups. i'd sell it here. >> dan? >> they got long last month, stick with it and buy it on pullbacks, but after 20%. >> a name i got tattooed in today, nation star was down on a walter's conference call. buy more of that. >> i would sell some upside calls in bank of america. the looking out in may for
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something after earnings has been so fast. >> guy. >> kellogg's. they're monster stocks. >> no cheerios. >> i'm melissa lee. thanks for watching. see you for "squawk on the street." "mad money" with jim cramer starts right now. >> i'm jim cramer. and welcome to my world. >> you need to get in the game. >> they're going to go out of business and he's nuts! they're nuts! they know nothing. >> i always like to say there is a bull market somewhere. >> "mad money," you can't afford to miss it! hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. just trying to save you the money. my job is not just to entertain you but to educate you so call me at 1-800-743-cnbc. too positive? too negative? or maybe positive with a skeptical bent. each day i try to gauge whether
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i am too optimistic or pessimistic when all i really want to be is an informed skeptic. especially on volatile days like today where the average is see saw, down, close be up four points. s&p slipping 2.4%. this morning on "squawk on the street," we had kind of a philosophical discussion about what's the right tone to offer you, the viewer. brian sullivan discussed the possibility of being too negative, and if you're too negative during the last european bank crisis, you left a huge amount of moolah on the table, enough to have true seller's remorse about the decision. he pondered the notion you can't be so negative you think the world is about to come to an end. even though people who are that pessimistic sound smarter to many who watch. sound smarter. that's right. brian contended that the pessimists somehow come off as more informed and that the optimists are perceived to know
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less. about what's lurking out there in the neglecter world. brian was saying if you're negative and stay negative, you have gravitas. but if you have positive conclusions, sounded like a lightweight. and, of course, i'm talking about a intellectual lightweight, because sullivan weighs in at 6'4", 240 pounds and has a mean upper cut, not to mention a vicious left jab. this stupid optimist versus rigorous pessimist dichotomy is something i've been dealing with every day of my life. ever since i started investing with the dow jones average at 1001. 1001. they are currently at 14,456. and i mentioned that twice, because as heavyweight and intelligent as the aggregate uber bear sounds, have i gone into the market with an ultra, ultra considered views, i wouldn't have made a time and probably would be practicing law
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at a small midtown firm. because i was mostly long or owned stock during the period of the greatest advance i can tell you. in confidence, guess what, it's -- it's off the record. off the record. we're off the record, right? i did pretty well. nonetheless, somehow i believe that -- had there been a twitters oty 30 years ago, i bet i would have been roundly criticized every step of the way for not knowing the true negatives for whistling past the graveyard, for not doing my homework, for being oblivious to the really horrifying concerns out there. 30 years later, the exact same conversation takes place onli online @jimcramer on twitter, join it, every day. even though i'm no longer bullish, i've been accused of being ignorant of every positive out there. same thing happens in my back and forth every day with very smart people who are forever trying to con -- i mean, get me
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to become more negative. now, in case some of you think i'm impermeable, please remember in 2008 when i told people to sell stocks at dow 10,000. fortunately, i was able to turn positive almost four years ago. and help people get back in. but it doesn't matter. there are plenty of people who either don't know or don't care about my personal top and bottom calling history. they think it's irrelevant. these are people who just look at the various obstacles to the up side and decide they are overwhelming and got to be heated to the exclusion of everything else i might want to say that's skeptically positive. it's the latter that i want to talk about. trying to be historical here, because that's rigorous. let's talk about the last time we got a huge decline in the stock market. the april to october of 2011 collapse where the s&p fell 17% from its high before hitting rock bottom in october that year. i say at the bottom. what were the headlines?
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pretty simple. i kept the paper. yeah, right here. the lead worry. you'll love this. ooh, what do we got here. markets near bear territory. manufacturing slows worldwide. what now for greece? hmmm. let's think about that. do you know that at that very moment manufacturing was beginning to accelerate in this country, led by housing and auto built, maybe greece is the word or something, maybe like travolta. next. troubles of belgian french bank dexia. turns out one of the largest banks in europe had to be totally recapitalized with tremendous losses. sound familiar? did it threaten the united states? ooh, norman bates scary. i don't think people remember dexia. it sounds like a vitt mine about to be recalled. what else? is look at this one, euro zone finance ministers reached a deal to provide collateral to finland
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in exchange for future agent greece. hmmm, wow. i didn't even recall -- i don't even recall if finland was holding up european aid to greece. they turned out to be one of the best performers since the bottom. and it turned out not to matter much at all. except as, yes, a buying opportunity. sprint, iphone, iphone, that didn't work out great. hedge funds, top dollar. oh, here's a story. look at this. buried in the tail of european wealth. the federal reserve started implementing operation twist. the plan to shift its treasury holdings into longer-term debt. a little guy. at that very moment, the bears would have been overwhelming you with the importance of dexia, finland, greece and the euro. if i bothered to state the importance of the fed's far reaching program, operation twist, remember like chubby checkers, i would have been mocked as a lightweight. i would have been revialed as someone who didn't understand that the dexia bank was far more
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important than the federal reserve bank. i would have been bombarded with cat calls had i said that despite what the paper might be telling you, i see manufacturing getting stronger over the country as housing is coming back and autos being revived. those that didn't see it that way, the bears that chose to denigrate the market and let's call it like it is, the country's ability to come back from that moment of whoa, they started so much smart, things were maybe about to get better, like me. yep, the bears sounded brilliant. they were dead wrong, but they were brilliant but they were dead wrong. as the s&p rallied more than 40% in 18 months since that moment and they were brilliant the whole time. but they were dead wrong. at the time, those who fought the feds' plan to get america to refinance at low rates -- those who said that won't work, they were few and far between. those who even -- you know, anybody who thought that would those who gave it a second en. thought instead of focusing on the greek runs and dexia, they were hounded and cowed for their bullishness. cowed, bullishness. how ironic the biggest fear of
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the market now is that the fed might undo this bond-buying program that was dismissed so harshly when it was a squib, virtual footnote, asterisk. let's fast forward to today. the most important piece of information that came out today was not the vote in cypress or the data -- for the record, we have none. or the european central bank statement that will provide liquidity to the cypriot banks. it was the housing permit numbers, best in five years. you know i'm a believer we're going to build double the number of homes. that's right, i think we're going to build more than 1 million homes. and these numbers indicate i could be very right. but not brilliant. and when housing is humming, there's a gigantic portion of the united states' economy -- housing is uniquely american. a lot of building products go into homes made right here. think about all the people who touch a home and away from its permit to its sale, builders,
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laborers, people who make piping, windows, doors, stoves, air conditioning, sinks, toilets, showers, baths, and, of course, electric and plumbing. then there's all the white collar jobs, the banks, sales, lawyers, they all get paid. and the retailers who need to make the place great. to me we will look back on this moment and recognize that while the whoever republican do you say rules imposed on the cypriots certainly damaged confidence in europe and the euro once again, what actually might have mattered in america is that the housing boom was picking up steam at the same time. i know, stupid. brilliant! so what am i asking for here. i'm trying not to be too positive or negative. but i'm definitely playing the skeptic. i worry about what i know and even worry about what i don't know. but most important, i want to emphasize what could drive the market either way. and the bottom line is, i think that cyprus can play a role in the market. but housing is more important. and when we look back two years from now, at what will be tomorrow's paper, and we see that little story, a teeny little story about homes buried within the four stories about the cyprus fiasco, we will know
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why the market increased in value and didn't crash as so many petitions mists who were brilliant tell me right now just has to happen. greg in california. greg. >> caller: hey, what's up, man? a question about ea and leadership. i'm really concerned with the currency. will another baby boomer be the leader they need to motivate a talented work force while deliver profits to shareholders. >> the real issue, it's a digital game versus analog. how do you like the way they schlagged john rick attello and as soon as he left the stock got hammered. wrong. barbara in virginia, please. barbara. hey, barb. speak to me. >> caller: hi, jim, how are you doing? >> real good, how about you? is. >> caller: i got a cold. >> oh, i'm sorry. hey, have you tried z pack? i know it kills you now but it's also good. >> caller: no, i don't think i want to try that. my question is, should i hold on to lululemon, despite the bad news about the pants recall? >> you know what, i'm getting a
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little tired of their lack of execution. and we put a man on the moon and we can't make anti stink pants that don't sheen? i don't know. i'm getting tired of lulu! brilliant! it's not the time to be too positive or too negative. you'll see plenty of headlines about cyprus, i think the it's near malta. what really matters might be there's millions of people being put to work in the housing industry in america. brilliant! "mad money" will be right back. coming up, buried treasury? 2013 kicked off with a bang. as the averages soared. but is the market about to meet its kryptonite, or could it continue to head higher? cramer is checking the technicals ahead of the feared fed decision when he goes "off the charts." and later, rent to own? all week, cramer is looking for businesses that have broken down the competition, and now stand to dominate the market. tonight, cramer is taking the
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rental car kings for a test drive. to find out which could have the most horsepower. plus, drug development. news from nps pharmaceuticals sent its shares up as much as 15% this morning. could opportunities abroad mean this is just the beginning? don't miss cramer's exclusive with the ceo. all coming up on "mad money." don't miss don't miss a second of "mad money." follow at jimcramer on twitter. have a question, tweet cramer #madtweets. send jim an e-mail to madmoney@cnbc.com or give us a call at 1-800-743-cnbc. miss something? head to madmoney.com. [ woman ] don't forget the yard work!
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to deposit checks from anywhere. [ wind howling ] easier than actually going to the bank. mobile check deposit. easier banking. standard at citibank. a> as as a way to find out what will happen in tomorrow's all-important fed meeting, the most important event of the week by far, it's worth taking another look at the thing that money managers fear most. at least if you listen to all the talking heads chatter on and on about it. you know what i'm calling it,
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i'm calling it the feds' vote from hell. causing the economy to get dinged, stock prices get slammed. people freaking about all this almost nonstop. freak out from cyprus. even as i think it's a silly reason, frankly, to be afraid. i told you i would trust ben bernanke again. he's committed to keeping rates low until it's 6.5%, pretty far away from where we are. i explained why you shouldn't let something that has to happen scare you out of high-quality stocks. and as they come down, i want to start getting more positive. i stated that the rates will go higher. it will be because things are getting better. so i think they are. but bernanke will try to keep the rates low as long as he can. you know what, though, while i think the financial stock charts are showing you rates are about to shoot up big, bond technicians may disagree. i would like to have all sides
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here. how about we take a more empirical look at the issue. if the fed really is about to stop its bond buying you know what's going to happen first, right, first and foremost. bond prices get hammered, particularly u.s. treasuries. and rates shoot up. that's why tonight we're going off the bond charts. that's right, not stocks charts, bond charts, trying to figure out where treasuries are headed with the help of the co founder of the carley trading and author of traders' first book on commodities. that's right, a trader's first book on commodities on the street.com. she acknowledges the rug will eventually be pulled out from underneath the bond market. eventually, and key word for her, she doesn't see it happening in the next several months. treasuries are likely to remain range-bound, sideways. if they pull back, she would view that as a buying opportunity for traders looking for a quick gain, not a selling opportunity. i know. bonds are boring. put you to sleep. i've been telling you for years, at the moment, long-term treasuries are always touted as being -- you can lose -- principle can go down.
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honestly, can go to par, all right? if you want safety, stick with secure, high-yielding stocks, not low-yielding long-term bond funds. this is a super important subject, especially now. because it's a barometer of the fear of the fed, represents the biggest stock market worry out there. and if garner is right about the price of u.s. treasuries holding up, that tells me you are going to have to buy some weakness in the stock market because you're not going to get hit with the nasty fed from hell. what are the charts saying? to garner. check out the weekly chart. interesting. i know. looks like a lot. we're going to walk through it. i've got a trip tick in my head. this is one of the speed traps. ltl, the i shares barkley 20 plus etf goes up with bond prices, okay. and when bond prices go up, that means interest rates are going lower, which we like, right? if it we're bullish, we want rates lower.
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this pictograph suggests to garner we're in a buy the dip situation with long term treasuries. the tlt has a floor of support at 114.59. $114.59. three bucks below where it is right now. there's the floor, okay? although garner doubts that floor will actually hold. she is looking at major support. 112.40, okay, long-term uptrend line. i know. the big up lines here, those are all support levels but suffice it to say the bottom she thinks does hold. the next support level -- anyway, that's the long term/up term. now, i want you to take a look at the relative strength index. remember, that's called the rsi at the bottom of the chart. remember, that's a momentum indicator that can measure whether the security is overbought or oversold. if the tlt does pull back to that 112 floor, okay, then the rsi will drop below 30. that's comfortable close to oversold territory. and it would make garner bullish in long-term treasuries, at
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least for a trade as charts that get oversold tend to bounce back with a vengeance! okay. that's what you've got to know about oversold. bounces back. meanwhile, the slowest indicator, the oscillator here, this is slow. another measure of whether something has become overbought or oversold. and it's already trolling ov oversold situation under which success to garner, it could be due for a reversal, back up in wake of its recent pullback. these two overbought, oversold indicators are installing this bottom is going to hold and we're going to go like that. or at least take that. but wait a second. she's not that bullish. there are some signs of the chart that tell garner a potential rebound might not be too far away. lately the tlt has been making what's known as a wedge formation. see that wedge? right? but if it can break out above the resistance at the top of the wedge, that's around the 120
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area, then garner could see the tlt rallying as high as 127. that would be a major move for bonds. interest rates go slower. if it this treasury etf can rally more than three points from here, garner believes it could have another seven points of upside. that's why i mentioned the big run they could have. and while she is not counting on the tlt to rally back to the july highs above 132, where we were, that was in the midst of the last european panic, she is not going to rule it out. in other words, she it thinking, boy, "cnn newsroocramer, you're. rates are going lower. you can see a similar trading range if you look at a chart of the ten-year treasury yields. okay, now we're going yield. okay, now we're doing interest. the yield -- i always have to teach this. okay. remember the yield and the price have an inverse relationship. when price goes up of bonds, the yield goes down and you're paying less on your mortgage. you can see the yields have been rising as treasury prices have pulled back. garner sees this ceiling of resistance around 2.1%. and even if yields break out above that level, there is a gap
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from last spring between 2.175 and 2.2 she believes will act as a ceiling. boom. okay? you know what i mean? meanwhile, there's a floor of support around 1.7. which is roughly in line with the levels that garner thinks treasuries can rally to. so, wow, she is what i call sanguine, a genuine s.a.t. word. next up, garner likes to look at the ctst's commitment of trader support that tells where various groups of market participants are putting their money. large speculators, that's the big money, small speculators and special speculators. so here's a chart of the ten-year treasury futures with the commitment of traders' numbers at the bottom, okay? in this last report, the ctfc claims large speculators shifted their overall stance from long to net short and did it last week. ha! man, cyprus played a nasty trick on you guys! in other words, they were betting against u.s. treasuries which is what you would expect, given how everybody is
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frightened about the fed bowl from hell. this is the largest net short position the big boys have had since august of last year. but this weekend we get hit with the mini crisis or you can call it any kind of crisis, i don't know. the mildly cyprus crisis. ratcheting up the fear and that's caused u.s. treasuries to rally nicely as they remain a safe haven. it's clear, last week was a bad time for the big boys to go, heavily short. that was a mistake. and many have gotten burned. garner suggests many may be looking to cover their position on dips going forward. which would put a nice floor under treasuries. last but not least, a seasonal factor that she -- heard someone say this just today. according to garner who cites, going long on the 30 year bond futures around april 24th, and then selling, around august
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19th, has been a successful trade about 70% of the time. 7-0. in other words, she thinks we're entering a seasonally strong period for bonds starting in april. now here's the bottom line. i don't want you trading treasury futures, uh-uh, no way. and i still don't want you investing in u.s. treasuries here. not when there are so many better higher yielding stocks to come down. you know i say the action that rates are going to go higher, not lower. but we have to take the varnt fuse into account into n this show. and garner's work suggests bonds are not about to fall off a cliff which is what would happen if the fed takes away the punch bowl tomorrow. one more good reason not to fear bernanke will do something rash tomorrow. it slams bond prices and stock prices. she says we're okay. wow. i hope so. after the break, i'll try to make you more money. coming up, rent to own? all week, cramer is looking for businesses that have broken down the competition and now stand to dominate the market. tonight, cramer is taking the rental car kings for a test drive. to find out which could have the
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you probably played monopoly as a kid. here on "mad money," we invented our real-world version and it is called ol oh i go opposely. and our version can help you make actual money, not pieces of paper that have no value. that's why we're going to play oligopoly all week.
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in oligopoly, it's where a few companies control an entire industry, very little competition, that allows the players involved to mercilessesly increase prices. tonight i've got a brand-new aligopoly -- i'm amazed the antitrust division let this happen. i'm talking about the rental car companies. hertz, avis and enterprise. don't let the rental car counters at the airport fool you. there really are only three left standing and control all the brands that give you the illusion of competition. a decade can ago there were nine, and competing, keeping rates low, playing against each other, alamo, national in 2007 became top dog. avis bought budget in 2006 and last year acquired zip car. hertz bought advantage in 2009 although now hertz is being forced to sell advantage to a
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group of investors in order to ease concerns about the big acquisition they made, the dollar thrifty deal, closed in november. and now there are just three powerful rental car companies and you're just a little nothing consumer. six months ago, these three, hertz, avis and enterprise, controlled a whopping 87% of the rental car market. not enough. in november, the ftc gave hertz the go ahead to do the $1.50 deal and now control an astonishing 94% of the market. what a game. how good was this dollar thrifty deal? as soon as you hear about this, you'll understand. consider that hertz had been pursuing dollar thrifty. initially offered to buy for $1.2 billion. and then got into an incredible bidding war with avis. finally, hertz upped their offer to $2.6 billion! last august. nearly twice as much as the original bid. and dollar thrifty accepted. man, how much is that going to drive hertz stock down?
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whoa! when the news hit, the stock of hertz, that raised its bid, it jumped 11%. o the market is not so dumb, huh? the stock of avis jumped 4%. very clear what's going on here. consolidation allowed the remaining players to increase prices and rack up higher profit margins. hertz closed the $1.50 deal back in november and that was creating a slap-happy three-way oligopoly. we have had other situations in the past in the united states, nbc, abc, cbs and the cable thing wrecked that. heavily regulated by the government, though. and the auto industry, ford, gm and chrysler forced out the rivalries, but then had to deal with international competition which destroyed the dominance of the big three. but the rental car companies, they don't have to worry about foreign competitors. this industry is tied to economic activity capacity and both are going in the right direction for the likes of hertz and avis with a stronger economy boosting demand and reduced capacity that allows them to boost prices.
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aided by an east coast storage rental cars from superstorm sandy. with 94% of the industry in the pocket of the top three players, they don't have to worry about nasty things like price wars. who try to gain market share by undercutting the big boys. those smaller operators are gone! pretty much. this is a beautiful oligopoly. the businesses are in great shape. what do we do? we can't buy enterprise, privately held, and staying that way. so the choice is between hertz and avis. since the beginning of the year, the stocks have outperformed the market. avis up 38% versus 29% for lowly hertz. however, i think going forward, hertz is the one to own. first of all, hertz has the 1.50 diagnosis acquisition, although i saw a downgrade. avis spent $500 million to buy zip car, kind of a faltering business, unproven concept but good technology and a real cult following. plus in june of 2011, avis spent $1 billion buying its european arm and increased exposure to
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europe. i'll take a pass on that, miley cyprus. second, hertz, the stock, has shown it's able to shrug off major selling pressure. march 6th, a 60.1 million secondary offering. private equity shareholders used to catch it up, that's on top of a 50 million share secondary in december for the same reason. despite big secondaries, the stock has worked and now the private equity players selling and own just 50 million shares -- that is a small amount when you consider what's absorbed. either the secondaries are over or there is one guy left, i think it's bullish the market has been able to absorb the big slugs of stock and more bullish this source of selling pressure is over or nearly over. so hertz is more growth, courtesy of its $1.50 catalyst and won't be held back by big secondaries longer. the stock trades at a discount to avis. yes, avis doesn't work as hard as hertz. hertz sells for 11.2 times earnings while avis 12 times. two years ago hertz sold for 19 times earnings. why don't we split the
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difference. you get a $28.35 stock, 35% higher than where it is now. and by the way, i think that's conservative, because the hertz of today is a much better company can than the hertz of two years ago. here's the bottom line. the rental car business is a beautiful, slap-happy three-way oligopoly! and while i still like avis, i think hertz is the board walk to avis's park place and the best way to play the game, thanks to the dollar thrifty acquisition. rob in massachusetts. rob! >> caller: hey, jim, how is it going? >> couldn't be better, thank you. >> caller: good. my question for you, what do you think of ford motor company? do you think it's going up, down? >> i think it's going sideways. here's why. they have a terrific smoking american business but still retrenching in europe. cut europe too late. it's -- i would say it's one-and-a-half up and one down. that's not what you want to hear but that's pretty much the odds. the car rental biz isn't geared
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up with competition anymore. it's a beautiful three-way, slap-happy oligopoly and when it comes down to it, i like hertz more than avis. don't move. "lightning round" is next! acceler-rental. at a hertz expressrent kiosk, you can rent a car without a reservation... and without a line. now that's a fast car. it's just another way you'll be traveling at the speed of hertz.
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a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel. delivering whatever the world needs, when it needs it. ♪ after all, what's the point of talking if you don't have something important to say? ♪ if you don't have something important to say?
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it is time! it is time! it is time for the lightni"ligh round" on cramer's "mad money." what's that about. are you ready, skedaddy, time for the "lightning round." i start with james in ohio. james. >> caller: hello, mr. cramer. big boo-yah to you from ohio. >> liking that. what do you got? >> caller: cy, cyprus semiconduct semiconductor. >> i think sip russ' time is here. with a terrific yield and tj buying the heck out of the stock, i want to buy it with him! cy. now tim in california. tim. >> caller: hey, cramer, it's tim in antioch, california. >> i had a feeling. what's up, tim? >> caller: just want to know about stc.
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lots of upward momentum in the last six months, wondering if they can sustain. should i buy, hold or sell? >> you know what, that stock is too cheap to sell, down 10% for the year. i am more inclined to be a buyer! farr in california. farr! >> caller: hello. cramer, a pleasure to be on your show. a big boo-yah to you from los angeles, california. >> oh, nice. what's going on? >> caller: i wanted to know what you think about e-trade. >> e-trade is fine. but i got blackrock getting slammed and i'm a buyer of blackrock, my trust, actionalertsplus.com owns it. jeff in new jersey. jeff. >> caller: hi, jim. how are you? happy eighth anniversary. >> thank you very much, jeff. how are you doing? >> caller: great, great. i'm looking at jazz, j-a-z-z, it's done pretty well skpeems
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and seems like it has room to run. wondering what your thoughts are. >> that jazzy jeff here. i looked at jazz today and i could not believe the stock is up so much. these biotechs are so difficult. i have to do additional work and come back with a total analysis of whether the saints are going marching higher with jazz pharmaceutic pharmaceutical. dan in california. >> caller: yes, mr. cramer, thank you for taking my call. i'm from california, and my -- the stock i'm concerned about is chiquita, cqb. >> rather than being chiquita, i'm going with tyson. i think corn is going down, very good report today that recommended selling, because corn is coming down. i'm with that. peggy in the bottom. peggy. >> caller: yes, hey, handsome jim, how are you? >> real good. >> caller: it's peggy in vegas, baby. and i've got a question for you. all these people are being
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incarcerated, it seems. what do you think about the incarceration business, like corrections corporation and also the geo group. what do you think? >> here's the problem with those stocks. i -- i understand they're kind of secular, unfortunate nature the corrections business are in. but these are contract stocks. and every time there is a state that puts one up, if you're not in it, you didn't win it. so i'm going to say don't buy. and that, ladies and gentlemen, is the conclusion of the "lightning round"! >> the "lightning round" is sponsored by td ameritrade. coming up, drug development. news from nps pharmaceuticals sent its shares up as much as 15% this morning. could opportunities abroad mean this is just the beginning? don't miss cramer's exclusive with the ceo. ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪
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and bacteria proliferate. ♪ protect your mouth, with fixodent. the adhesive helps create a food seal defense for a clean mouth and kills bacteria for fresh breath. ♪ fixodent, and forget it. last friday we looked back at the eight best performing stocks since "mad money" went on the air, screening out the ones too small to talk about on television. you know what, two out of the top eight stocks were orphan
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drug makers, companies that development treatments for ultra rare diseases. i'm a regular daddy war bucks in the biotech sector and tonight i want to talk about an orphan drug player that really worked today. so thrilled we're going to have them on because you could tell from the get-go it is big. nps pharmaceutical, a lead drug for short-bowel syndrome, a rare condition where patients need to be fed intravenously for 10 to 12 hours a day because their intestines cannot properly absorb so they cannot lead normal lives along with another couple interesting drugs. nps is buying back the worldwide marketing rights from at that deada pharmaceutical, approved in europe but controlled the distribution and weren't doing anything with it. so nps is paying them $50 million and offering milestone payments in exchange for the overseas commercial rights to gatex, called revestive along
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with the rights to their hypo parathyroidism drug, which could be big, approved in europe but waiting for fda approval here. this move gives nps more up side if the drugs do well in europe. the company has to do the heavy lifting or the work of the marketing. the response, though, was really positive. 84-cent jump, 9.29%. nps has given a 7.7% return since late october, it's been a wild trade. i've got to admit. let's check in with dr. francois nader, president and ceo, and find out what it means for his company going forward. dr. nader, welcome back to "mad money." >> thank you, jim. good to see you. >> first, congratulations. this was a real coup, and i think a lot of people were taken aback, because they know this drug has gigantic potential in europe, but you were able to get it back for just $50 million. >> well, absolutely thrilled with this deal. actually, we got back two products, worldwide, excellent opportunity for nps.
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>> why would they do that? to me, they've got a sales force, they see the numbers. wall street is talking about this being a multihundred million dollar deal for you guys. >> we hope so. but our focus is the rare diseases, orphan indication. this is our core business. it's not takeda's. >> right. they're mass and you're orphan, so to speak. >> in many ways, but at the same time, they share the up side, because the deal which was celebrity for us, we did not pay cash, we paid in stock so they can benefit from the up side. >> now, this morning in the "new york times," a positive article about how they were spending less on drugs, but i'll use their language. they say there are certain specialty drugs that cost the system a lot of money. four drugs approved in 2012, costs of nearly $200,000 per patient. that includes one of yours. article says that it's jaw-dropping. but does it save the system money? >> it's saving the system money. actually, we are in week six of the launch. and so far, we have had meetings
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with 32 health plans, 88 million lives covered. and so that are reimbursement has been very favorable. which means the pairs are understanding the value. >> in other words what they're saying -- we had to cover these people who had this illness. it has to be costing them more for the 10 to 12-hour intravenous than your drug. >> it's costing the system anywhere between 200 to $600,000 a year per patient. >> right. >> extremely expensive condition, unfortunately. >> now, some of the notes talk about how in europe, you're going to get less money for the same drug than you get in the united states. how do we understand that that's fair? is the u.s. -- or the u.s. insurers paying too much versus what's happening in europe? >> i think the market conditions are very different in europe compared to the u.s. this has been traditionally the case. and the orphan business, some drugs are reimbursed the same way, others are less.
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our objective is to secure the highest reimbursement in europe. this is something we'll start to do as soon as practically possible. >> there are not a lot of people who have this disease. now, you were talking in your terrific note that came out today about the acquisition that there are -- at this point, 72 people taking this drug. >> 72 people on gatex actually got their prescription. and we are in the process of securing reimbursement for them. >> and that's enough for a company to become a very large market capitalization company. >> it's a start. again, this is week five of the launch. and we hope that we will get anywhere between 2 to 300 patients on gatex before the end of the year here in the u.s. >> jeffries put out a note saying they think that the sufferers for your second drug, your hypoparathyroid may be more than 50% higher than we first thought, talking about a number of 15,000. could that drug be bigger than
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this drug? >> that will probably be bigger in terms of number of patients. we don't know yet. it might very well be. i can tell you internally we're very excited about the potential. >> now run through people what -- because that apparently has more uses than just one, right? because people talk about multiple uses for that drug. >> that's correct. so it's really the parathyroid hormone approved in europe for osteoporosis. >> right. and that's a gigantic -- >> it is. >> indication. >> it is. but at the same time, our core business is really the rare disease. so this is why in the u.s., we will be filing the hypoparathyroid indication before the end of this year. >> i thought you might be able to be approved -- there was a manufacturing problem for that drug. has that now passed? >> we're fixing it. it's not completely fixed. >> it comes and expects and they're not happy or you're not happy? >> actually, we're not happy. we're a little bit of a finish problem. we manufactured 140 lots without
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any glitch and then unfortunately now we have one. but we are in the process of resolving it. >> okay. last question. when you read articles like the "new york times," do you worry about that someone is going to say, you know what, we've got to get this medicare, this health insurance -- there was a big article by steve bril on cover of "time" magazine. we've got to crack down on the nps'. they're making too much money. >> well, my answer is, some might be making a lot of money. but at nps, we characterize the value and this is what we're offering. and this is why, despite our price, the payers are understanding the value of gatex and reimbursing -- >>y wert take care of these people and try to get them normal lives or we wreck their lives. >> exactly right. not only they will cost the system but not be productive for society either. >> why should they be doomed if you have something for them? >> exactly. and something that works. >> okay, dr. nader, thank you so much. that's francois nader, president and ceo of nps pharmaceuticals up huge today. i don't think it's done.
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two drugs that are big. "mad money" is back after the break. ♪
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the europeans make some decisions pretty simple and easy, i might say. like the decision whether or not to buy gold. for most of the last five months since gold peaked in october, the precious metals not so hot. i like to recommend to you, peaked in october at 174 smackers, but trending down a month ago. until this week, it seemed like gold, which has been a monster performer for more than a decade had finally lost its luster. the drift and the collapse of the gold stocks seemed to be forecasting the days were over. the great multi-year bull market in gold ending! and then the europeans steps in to stem the decline with the absolute dumbest plan i had seen, to tax the depositors, the small-time depositors of a country with hot money, perhaps hot laundered money from russia.
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that's right. the europeans with the help of the imf reminding you just how stupid of the concept of the euro is, how intendable it is to keep your money in a european bank. the moronic plan gave a super reason to go right back into gold. now before i tell you how i think you're going to get still more fantastic chance to buy the precious metal, let me say i don't want to fall prey to the notion what should happen will happen. i think if i had money in the european bank, i would say to heck with it, i'm going put it in an american bank. who needs this worry. i would typically feel that way if i were wealthy and had the ability to wire the money with a key stroke to let's say jpmorgan where i got my money now. even with the revelations, revelations i should add, brought to light by jpmorgan itself. it's so easy to move your money, i can't believe any wealthy person stays in the european banks. you can get a two-fer, kill two birds with one stone. swap out of euros into dollars will woo y you get the protectin of the fdic or whichever. in general, they are all in better shape than the strongest european bank. all that said, i don't know if i
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want to be in the dollar long-term, given our lack of frugality and washington's inability to do anything intelligent with our budget deficit. so the logical default currency is gold. we had a lull in european problems, but thanks to a lack of regulation -- how else did cyprus get out of hand, especially if the same thing happened in iceland, the lull is over. i think this is one more reminder rich europeans will switch from keeping europe owes in banks to keeping gold in deposit boxes. if you have no exposure to gold, buy some now. sure, most europeans may keep their money in the bank. they live there, that's their life. but the wealthy are looking to pull out money over time and the big beneficiary will be gold. amazingly, the european regulators can't help themselves. their incredible incompetencies makes buying gold the easiest decision in the world. these idiots are the gift that climpgs the gold buy every time they take action and this latest action may be the best when it comes to pushing gold higher than maybe since the reign of
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